Wednesday, April 03, 2013

Eurocrash: the dominoes start to fall

It almost defies belief that we could actually find important the resignation of a minor politician on a remote island republic. But when he is the finance minister of Cyprus, then the event is of some significance.

Sarris gives as his reasons the harshness of the bailout deal, but also the fact that he is under suspicion for warning insiders about the impending compulsory levy, thus enabling them to get their money out of the country.

But, as an investigation commission is sworn in, president Anastasiades is also under considerable pressure to go. He too has been implicated in taking advantage of insider knowledge.

For Die Welt, however, the commission is largely irrelevant as it will find nothing we didn't already know, yet will skirt round the most important facet of the crisis – that Cyprus was extremely badly governed.

The main flaw, however, is rarely emphasised – the hubris of the "colleagues" in thinking that countries such as Greece and Cyprus could easily be absorbed into the eurozone, without penalty. But, given the hand they had to play, there were very few options available, especially when confronted with the particular structure of the Cypriot banking system.

Nevertheless, there is thus a growing sense of irritation in Germany, mixed with concern verging on alarm, at the way it is being scapegoated, to the extent that, if the "German bashing" continues, there is a real fear that the project will be damaged.

That doesn't stop the likes of Heffer sounding off about the "Fourth Reich", and Kavanagh in The Sunrailing against the "arrogant EU" sparking panic by "confiscating cash from ordinary savers".

On a point of information, it was actually the Cypriots who proposed the levy for the sub-€100,000 depositors, but at least Kavanagh is right in averring that the likes of Greece and Cyprus should never have been admitted to the eurozone.

But while this is at the heart of the current crisis, we need to remind ourselves that it is in no-one's best interest to see a disorderly collapse of the euro. The consequences would be dire, and the UK would not escape damage.

And nor indeed is it in anyone's interest for corruption and mismanagement to be so prevalent in the "clubMed" countries. For this, as Sarris is now finding, there always had to be a reckoning, and it was never going to be painless. And for that, neither the EU nor Germany can be entirely blamed.

If there are to be lessons learned from all this, then, it is that the people always end up suffering from the sins of their masters. If we are to prevent this, we must take a greater part in controlling our own destinies, and the conduct of our governments.